tv Nightly Business Report PBS February 12, 2015 7:00pm-7:31pm PST
this is "nightly business report" with tyler mathisen and sue herera. don't look now. the nasdaq is at its highest level since march 2000. just around the time that dotcom boom and today's index a lot different. >> divorce in aisle 9. ditches american express and the stock suffers a big blow. economic ripple as congress calls for a resolution a new report puts a number on the amount of economic activity tied to those west coast ports and it's big. all that and more tonight on "nightly business report" for thursday february 12th. >> good evening and welcome. stocks rally. the s&p closes in on a record. the dow jones industrial average sees a triple digit gain but we
begin tonight with the nasdaq. powered today by a 9% move in cisco. a deal in the online travel industry and stocks like en envidia. the infamous level of 5,000. the number is synonymous with the dotcom bubble that peaked in march of 2000 and went bust fast. the technology sector is a lot different now than it was then. bertha coombs takes a look. >> reporter: health care anovalan in the nasdaq composite. investor appetite for new tech stocks helped push tin dex within 5% of all time ether net bubble high. at the risk of sounding trite, the new tech boom is different. >> in 2000 you had a power ball
move in the nasdaq that s following the tail end of this 15 year secular bull market and now it's been a much steadier healthy move into 5,000 on what we see as the early stages of a new secular bull market. >> reporter: amo biggest differences? bioteches now the biggest driver of gains up 35% in 2014 as companies like gilead have brought big drugs to markets. another big difference? tech valuations. microsoft the biggest weight in the nasdaq 15 years ago traded at 70 times earnings. today, apple the biggest driver is valued at 14 times its forward earnings after posting the highest quarterly profits of all time. >> i see this as a change in that consumers are spending more on tech versus enterprise. microsoft was mainly selling to businesses. now apple is obviously a very consumer-focused company and y spending more money on our gadgets.
>> reporter: while the s&p 500 and the dow industrials continue to set new records, the nasdaq composite has yet to take out that milestone. with big tech stocks like microsoft, cisco and intel well off their internet bubble highs. is the nasdaq returned to 5,000 a reason for tech investors to take pause? >> given the broad based leadership we see throughout the market i think a breakout above 5,000 would only lead to stronger gains for tech stocks. >> reporter: from a fundamental perspective, i don't see it being a top at any reason now. the number to watch on the na 5,048. that was the closing high on march 10 2000. the high that day was 5138. from the nasdaq market site bertha coombs "nightly business report." >> will it be old tech or new tech that gets the nasdaq to the next level? let's ask brian blair, managing director with rosenblat
security. it was an interes day today. cisco had a nice day after its earnings. i called that old tech. tesla had a tough day after its earnings. i call that new tech. it's too easy to write off some of the old tech companies, isn't it? >> it is. you know one of the reasons is because they have large buckets of cash and throwing a lot of money into r&d and finding a way to grow and stay relevant now and the best throwing money into what they believe is the trends of tomorrow. a lot of companies, cisco, microsoft, fighting and staying relevant. >> where do you find the most opportunity? a lot of people thought it would be biotech this year but we have seen the biotech stock roll over after massive ipos last year. where do you still see opportunity? >> there's still a lot of opportunity in the mobile sector. smartphones are still only about 55% of the global hand set market and so if you think about the global market there's still a lot of opportunity to ride the wave of india getting the
smartphone. the rest of china getting 4g. south america, central america moving on to 4g networks. that's one big area and i think the internet itself provides, you know a lot of opportunity. i think there's only about 2.5 billion, maybe less than half the world's population has internet access so i think there's still opportunity there as well. i think for years to come. >> i don't know whether to call apple old tech or new tech and i would just call it good tech. as we look at the classic old tech companies, the intels the ibms, the microsofts the ciscos which of those would you call the ones that are the oracles even which would you call the most vulnerable or unprepared for today's new world and which would you call the ones that are best positioned? >> i think intel actually represents one that's very vulnerable and i think one that represents in many ways old tech. you know if you think about a lot of the most important trends in technology a lot of them related to mobile to
smartphones, to tablets, to wearables, a new and emerging space, you don't see intel. you really don't see intel anywhere. and that's where a lot of the growth and the volume has been in the last ten years and intel has been virtually non-existent. they've still sell into desktops and servers. they put up a nice quarterly number but not participating in the growth or where i think things are moving directionally. i would put them on the top of the vulnerability list in terms of old tech. ibm is another one that's been struggling. we see them make comments about investing in, you know trying to be a part of big data the big data trend. cloud computing. but we don't see it reflected in their numbers so i would put those on the top two on the vulnerable list. on the good list you know, microsoft i think is really impressing in a lot of ways with the future not just in xbox but they're showing a new virtual reality headset called holo
lens. it's forward thinking. they're looking ahead and in front of things. i would separate them like that. >> brian thank you very much with rosenblat security. >> you bet. one dow component that wasn't up with the rest of the market was american express. in fact down quite a bit. shares lost more than 6%. the dow's worst performer today after costco said it would stop accepting american express credit cards at its u.s. stores. dominic chu is joining us now with how important the relationship is between costco and amax. >> it's huge and the reason why amax said you can expect to see earnings and sales way down by this relationship ending over the next couple of years because believe it or not, the estimates are that about 8% of all spending on american express cards comes at costco u.s. locations. that's how big it is. and now, costco is huge. they sell a lot of stuff. the national retail federation
said they're the world's second biggest retailer in terms of total revenues. they sell a lot of stuff. over the past 16 years, the only ways you could pay out of costco were cash debit card or an american express and then they linked the amax to their membership meaning you could have an amax card linked to their membership which is a reason why it's so huge. >> they were negotiating, broken it off apparently. amax lost the deal with them. when does the deal end and when will that revenue stream stop for them? >> march of 2016. you can continue to use your amax card until march of 2016. at that point, they'll look for a new replacement. of course, the negotiations are ongoing with costco any potential partners. the big deal is amax's relationship in canada with costco ended this past year as well. they went with capital one on a mastercard basis. that's one of the things people look for. who's going to replace amax? could it be capital one? maybe discover. maybe another bank using a visa or mastercard payment processer.
that's to be a big deal. >> dom, thank you so much. dominic chu. despite the fall in american express, stocks did end the day higher. a cease fire with russia and ukraine. with oil prices higher all ended up. dow up 110 points finishing at 17,974 a few points shy of 18,000. nasdaq up 6 and s&p gained 20. more on the cease fire between russia and ukraine. it helped ease investor concerns since anymore trouble in that region could weigh on europe's economy but not all of those issues between the nations were ironed out. julia chatherly reports from brussels. >> reporter: optimism leaving this meeting about the peace deal signed between the prorussian separatists, russia and the ukraine. i think the fact that the talks took 17 hours into the early
hours of this morning on two important points. one, ultimately they were pretty tough negotiations and two, the desperation of the lead is behind them just to get something signed today. the billion dollar question now becomes, will all sides abide by the cease fire agreement that begins at midnight on sunday? there's plenty of skepticism here behind the scenes given what we've seen in the past and so that's the spotlight now falling firmly on russia. no talks for the sanctions but i think the message is that actions speak louder than words. we've left a lot of meetings bemoaning that the leaders can't agree on further sanctions with russia. perhaps that overshadowed and offset today by the announcement of a collective $14 billion bailout for ukraine but behind the scenes no illusions of the difficulty of reforming a country that is for all intents and purposes at war. for "nightly business report," i'm julia chatherly in brussels frmts on to the rapidly changing
situation in greece last night we told you about reports that an agreement in principal reached with greece and euro zone creditors but quickly fell apart. michelle caruso-cabrera tells us what went wrong and what might come next. >> reporter: it was a night of high drama. many participants in the meeting yesterday believed they reached a broad agreement in principal with greece. hammered out at another meeting on monday but at the last minute greek finance minister refused to sign the draft statement that they were supposed to release to the public saying he couldn't sign it after putting in a call to athens. despite the high profile breakdown, moved anyway. market participants focus on a leaked draft of what he was supposed to sign. showed that the greeks made concessions that were unexpected. the draft statement referred to exploring, quote, the possibility of extending and successfully concluding the present program. that's something greece
previously said it would never do. and it seems the crucial step though in order to get continued support for their banks from the european central bank. also adding to the optimism a german newspaper reporting that the ecb had agreed today to extend even more loans to greek banks through emergency lending program. one way, this is bad news. the banks in greece are still under stress. on the other hand market participants show the ecb is willing to support the country. all of europe's finance ministers meet again for another negotiating session on monday. that day will be key to see if they can get a solid deal hammered out. for "nightly business report," i'm michelle caruso-cabrera. still ahead, negotiations at the west coast ports are strained and now members of congress say they're ver
a big miss for retail sales for the second straight month. sales fell more than expected 0.8% in january. now part of the reason can be explained by the fall in gas prices which lowers receipts at service stations but as steve liesman reports, that's only part of the story. >> reporter: disappointing retail report for january with a mystery. if americans are spending more and making more because the nation added a million jobs over the past three months, where's the money going? rather than the decline expected by wall street the government said spending in america shops
fell nearly a full percentage point in january. there was an expected 9% plunge in gasoline sales but sales were also off at department stores furniture outlets and auto dealerships. did the extra green just vaporize? that's not the most likely. rather economists on the case say more money is saved and used to pay down debt. a recent visa said hanging on to roughly half of gas savings. some of the money could be going to services that accounts for two-thirds of all consumer spending and is not counted in the retail goods report. service spending would include increased spending on health insurance. there's another solution to the mystery. inflation or in this case deflation. the number reports are not adjusted for changes in prices. if they fall, could be buying the same stuff but paying less. adjust for real spending when it
calculates gdp, spending could show a gain. case solved in not quite. optimists aren't ready to assume they will fall and real evidence in the months ahead when the mystery of tng money is solved at cash registers around the nation. for "nightly business report," i'm steve liesman in dallas. a big threat to the economy is the slowdown at the west coast ports. according to guggenheim securities the l.a. long beach port alone accounts for nearly 40% of containerized trade and estimated 12.5% of u.s. gdp tied to cargo moving through the west coast ports. as we told you last night, work has been suspended again. this time for four days. jane wells has more. >> reporter: on thursday more than 40 container ships were either anchored off the west coast or circling waiting for anchoragestan argo pacific representing
employers saiding crews withecially since thursday r pay.n yore foreman. same pay for this weekend and mond president'either. which it a strike with pay. >> every time we solve an issue that's important, they layer on new demands. the latest one we can't live with. >> reporter: according to management the demand it cannot live with is one by dock workers to be able to unilaterally fire arbitrators. goods take weeks longer than normal to move in and out of the west coast, congress is worried. >> well this is clearly the greatest threat our nation faces. notwithstanding the stuff going on overseas. >> reporter: there would need to be a complete strike or lockout for the president to be able to force a cooling off period and reopen the ports under the tas hearthly act. work is supposed to continue moving containers out of the yard and as for negotiations which started last may -- >> we've been sitting here as i give this speech for five days
waiting for pma and they haven't shown up yet. >> reporter: the pma said negotiations were resuming today and the reason that it hasn't met with the union at all this week is because there's been no point. that while management has offered concessions, the dock workers, quote, won't budge. for "nightly business report," jane wells at the port of los angeles. >> the impact of the slowdown is already being felt. according to goldman sachs research shippers have diverted cargo awa at the expense of increased freight costs and that's leading to a decline in intermodal volumes for union pacific. and retail rerouting shipments using air freight and that is helping companies like fedex and ups. we begin our market focus tonight with disappointing results from aig. the insurance giant saw its profit slide hurt by weak performance in its corporate category. the company announce addd a buyback that adds to the nearly $5 billion in stock it bought back last year. it also declared a dividend of
about 12 cents a share that has a yield of about 1%. after the bell the shares were volatile. before the close, the stock was up 20 cents to $52.45. it was the opposite story for cbs which also reported after the close. the tiffany network with better than expected revenue with higher than average sales helped by thursday night football and the ads for the midterm elections that sent higher in after hours trading. before the close shares up nearly 2% to $57.77. inflation in brazil and a stronger dollar took a bite out of avon's overseas revenue. the cosmetics makers results missed analysts on both the top and bottom lines. the company said the currency fluctuations will continue to weigh on performance this year as it does most of its business outside the u.s. but avon also told investors it expects its north american business to turn profitable for the first time in three years. shares rose more than 1% to
$8.69. kellogg still has the breakfast blues. the corn flakes maker cut its forecast long-term annual revenue growth as cereal sales continue to be quite sluggish. shares fell 4.5% to $63.30. apache also posted a quarterly loss as the lower revenue expectations and it announced it's slashing the rig count by more than a third in response to crumbling crude prices the stock down slightly to $64.58. time incorporated gave investors a weak sales outlook for 2015 that weighed on shares in today's trade. this is the publisher of magazines like people and sports illustrated reported a lower than expected quarterly profit as it's been dealing with falling circulation and lower ad revenue. shares off almost 2%. they settled at $24.49. expedia on a shopping spree. its latest acquisition, orbitz just a few weeks after buying
travelocity. valued at more than a billion dollars taking on priceline. soared on the news as well as expedia. sigh simon hobbs looks at how this changes the global travel industry. >> reporter: orbitz is one of the smallest industries and would have struggled against the growing market of expedia and priceline who spent billions on advertising a new technology. so as the saying goes if you can't beat them join them. expedia already boasts 13 major brands. $1.6 billion in cash expedia ceo debra kor rashahi can add ebookers and hotel club. those four he said will be much more profitable once he's cut $75 million in cost and gives them access to expedia's big stockpile of hotel rooms for sale. >> we've got one of the broadest
inventories out there and we think the complement to the bank program, we think that's a terrific combination. >> reporter: the c.o. bonnie is well respected. he's reinvigorated the business with better technology and a private label business essentially running the back office for ad hoc sites like amax travel but ultimately without the power of expedia and priceline to fit in reality for business he went for a trade sale. >> people try to write us off in the past but i think they can see the continued ongoing growth really showing through. >> reporter: it's what remains of travelocity that expedia bought for $180 million. triva goe cost $8 million but rival priceline deal's biggest. open deal table for $2.4 billion and kayak for $1.7 billion.
rashai rejects the idea there's a lack of competition or the regulators should get involved. >> we compete in a much larger segment in general and there's lots and lots of competition for that top audience. >> reporter: and for travelererss shopping online the co said all major brands will operate with an independence that ensures there's still a deal to be had even if they're still all owned by the same company. i'm simon hobbs at the new york stock exchange. coming up what some local florists are doing to keep businesses from wilting as competition increases and valentine's day approaches.
business is blooming for the flower industry but not necessarily for your local florists. increased competition in online delivery companies are pinching many small business owners. but as kate rogers reports, some old-fashioned mom and pop shops are finding an edge in order to battle back. >> reporter: this year more than $2 billion will be spent on flowers for valentine's day alone. but local florists like caldwell flowerland in new jersey are seeing increased competition and in some cases losses. that's because of big ecommerce players like 1-800-flowers, ftd and proflowers. in fact local florists saw their revenue slide 4% last year. flower land in business 30 years
seen its revenue fall. but owner frank del santee said there's a silver lining. it took a dip but educated customers where to come back to. weeded out other competitors. >> reporter: any way you spin it there are more options than ever. the new crop of start-ups are blooming in the flower delivery space. angel list names 30 of them including urban stems and delivered bouquets on demand within an hour or so. even whole foods is getting in on the action partnering with grocery delivery start-up instacart in three cities and then big box stores like walmart. analysts say they could be more detrimental to local florists than ecommerce. delasanti said he has one thing big box stores are missing. a personal touch. >> yeah we try to keep a year round price and then we try to keep the consistency and quality. >> reporter: business here at
flowerland is still pretty good. in fact, they'll sell about 10,000 of these roses over the valentine's day holiday weekend this year. but increased competition from other ecommerce players in the space has hurt other local florists around the country some of whom have had to close their doors for good. for "nightly business report," i'm kate rogers in caldwell new jersey. kate got the rose from the bachelor. finally tonight, three people to fight the odds and one, the $564 million power ball jackpot. two of them are not sitting here tonight. the tickets told in texas, north carolina and puerto rico. that's the first winning power ball ticket ever sold outside of the continental united states. would split $831 million before taxes. we're both here, sue. >> we didn't win but if you're watching you probably didn't either. come back here tomorrow night. >> we'll see back here. that's it for "nightly business report," i'm sue herera. >> and i'm tyler mathisen.